Owners - Strata Plan 35612 v Irwin & Tebb

PARTIES : Phebe Irwin (Plaintiff - 11562/03)

Andrew Tebb (Plaintiff - 11527/03) FILE NUMBER(S) : SC 11526/2003; 11527/2003 Mr E Assaf (Plaintiff)

COUNSEL : Mr P Bahlmann (Defendant - 11526/03)

Mr McCrudden (Defendant - 11527/03) McCulloch & Buggy (Plaintiff) SOLICITORS : Bahlmann Burke Lawyers (Defendant - 11526/03)

LOWER COURT Local Court JURISDICTION : LOWER COURT 954/2002 FILE NUMBER(S) : 1049/2002 LOWER COURT Magistrate Michael Price JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11526/2003 - THE OWNERS CORPORATION OF STRATA PLAN 35612 v PHEBE IRWIN 11527/2003 - THE OWNERS CORPORATION OF STRATA PLAN 35612 v ANDREW TEBB

JUDGMENT (Appeal - Small Claims Division of Local Court - damage to electrical appliances - power surge) 1 MASTER: By summonses filed 20 June 2003, the plaintiff in both matters seeks firstly, to appeal the decision of Local Court Magistrate Michael Price dated 23 May 2003 in Local Court proceedings numbered 954/2002 and 1049/2002 pursuant to s 69 of the Local Court (Civil Claims) Act 1970 (the Act); and secondly, an order that verdict and judgment be entered in its favour. This matter was referred to a Master for hearing by the List Judge. 2 The plaintiff appeals the whole of the decision of Price LCM on the grounds that they were denied natural justice because firstly, the order cannot be supported having regard to the evidence; secondly, the Magistrate failed to give each party the opportunity to adequately present its case; thirdly, the Magistrate failed to observe the procedural and other rules provided for in the relevant statute; and fourthly, the Magistrate failed to come to his decision with that sense of responsibility that is the necessary accompaniment of the duty to do justice. 3 The matter arises out of a claim for $10,000.00 by each defendant, tenants at the plaintiff's premises at 72 Market Street, Wollongong, for damages to their electrical appliances caused by a power surge that occurred at the premises on 9 February 2002. The issues were firstly, whether the defendant had delegated its duty of care to the strata manager; secondly, whether the plaintiff had been negligent and/or in breach of its duty to maintain the premises under s 62 of the Strata Scheme Management Act 1966; thirdly, whether the damage was reasonably foreseeable; fourthly, whether the plaintiff had taken reasonable care to prevent a risk that was reasonably foreseeable; fifthly, whether it was unreasonable to request an electrician to conduct a periodic inspection of the fuse box; and sixthly, whether a maintenance schedule would have detected the fault in the electrical system and rectified it. The plaintiff in these proceedings was the defendant in the Local Court. I shall refer to the Owners of Strata Plan 35612 as the plaintiff. Likewise I shall refer to Ms Irwin and Mr Tebb as the defendants. 4 On 23 May 2003 in relation to Mr Tebb the Magistrate entered a verdict in favour of the plaintiff in the amount of $5,124.80 and in the matter of Irwin the Magistrate entered a verdict in favour of the plaintiff in the sum of $6,224.17.

The appeal 5 Section 69(2A) of the Act allows an appeal to this Court from the Small Claims Division of a Court only on the grounds of lack of jurisdiction or a denial of natural justice. Section 69(4) of the Act provides that the Court may determine an appeal by either (a) setting the judgment or order aside or (b) by varying the terms of the judgment or order or (c) by setting the judgment or order aside and remitting the matter for determination in accordance with the Court's directions or (d) by dismissing the appeal. 6 The plaintiff referred to Kojima v Australian Chinese Newspapers [2000] NSWSC 1153. In Kojima O'Keefe J helpfully referred to the objectives of the Small Claims Division. I have reproduced paragraphs 17 to 20, 23 and 24 of his Honour's judgment below. "17 The Local Courts (Civil Claims) Act 1970 (the Act) provides that for the purposes of exercising the jurisdiction conferred on courts by or under the Act, the court is divided into a General Division and a Small Claims Division (s.61). The jurisdiction of the court in its Small Claims Division may be exercised by an Assessor or a Magistrate sitting alone (s.63). The jurisdiction of the court sitting in its Small Claims Division was, at the material time, limited to $3,000 (s.12(3)). In September 2000 this jurisdictional limit was increased to $10,000.

18 The statutory basis for the procedure in the Small Claims Division is specified in s.23B of the Act as follows: "(1) Proceedings in the Small Claims Division of a court are to be conducted with as little formality and technicality as the proper consideration of the matter permits. (2) The rules of evidence do not apply to an action being heard or other proceedings in the Small Claims Division of a court. (3) An Assessor or Magistrate exercising the jurisdiction conferred on a court sitting in its Small Claims Division may inform himself or herself on any matter relating to an action being heard or other proceedings in the Small Claims Division in such manner as he or she thinks fit." (4) Proceedings in the Small Claims Division of a court (other than any judgment given or order made in respect of the proceedings) are not required to be recorded. 19 A clear legislative policy emerges from the Act in relation to small claims, namely, that there should be a quick, cheap and informal resolution of such claims. To achieve this, the proceedings should be conducted with the minimum of formality. That has many advantages. It tends to shorten proceedings. It assists in reducing costs. It makes it easier for litigants in person to understand the procedures, perhaps to appear for themselves and not be disadvantaged by excessive formality and procedural rules. Furthermore, the legislation has been so framed as to ensure to the greatest extent possible that claims before the Small Claims Division of the Local Court should begin and end in that court. The limitation on the right of appeal permitted by the statute betokens this. Such a policy is readily understandable in the light of the fact that the ceiling for claims in the Small Claims Division is so low, $3,000 at the material time. Taking up the time of superior courts with such small matters is thus avoided in the vast majority of cases.

20 It is against such a legislative framework and intent that the Small Claims Division of the Local Court has evolved procedures for dealing with small claims. These are largely the work of the late Mr K Henderson, Magistrate, and has been followed for some years. There are different forms of hearing open to the parties to accept in order to progress their claims with a minimum of expense and formality and maximum of speed, having regard to the amount involved and issues posed in each case. They are: (a) informal hearing, that is a procedure in which written statements and relevant documentation is presented without the necessity or expense of witnesses attending. No oral evidence is given and there is no cross-examination;

(b) semi-formal hearing, that is a procedure adopted in a case in which it is considered necessary that a witness or witnesses should be questioned by the parties after their written statements have been tendered;

(c) formal hearing, that is a procedure in which evidence is taken on oath and there is cross-examination and addresses in the same way as in an ordinary adversarial proceeding in a superior court.

23 The requirements of natural justice (or procedural fairness as it is now commonly referred to) apply to the Small Claims Division of the Local Court. This is clear from the nature of the function to be performed by that tribunal and the statutory recognition that is afforded to natural justice by s 69 (2A) of the Act.

24 The content of the requirements of natural justice is not fixed. The content is fluctuating. The overarching requirement is that of fairness (National Companies and Securities Commission v News Corporation Limited (1984) 156 CLR 296 at 312 per Gibbs CJ with whom Brennan J agreed). For a court that normally involves a duty to: (i) act judicially;

(ii) deal with the matter for decision without bias;

(iii) give each party the opportunity of adequately presenting its case;

(iv) observe the procedural and other rules provided for in the relevant statute;

(v) come to its decision with that sense of responsibility that is the necessary accompaniment of the duty to do justice."

Local Court proceedings 7 The plaintiff submitted that the Magistrate allowed an expert report of Dr Bailey into evidence that was served late by the defendants and was inconsistent with an earlier version of the report with the same date. The plaintiff also submitted that the Magistrate also disregarded its expert's report of D C Electrical and the report obtained by the Owners Corporation. The plaintiff submitted that the Magistrate erred when he found that there was no evidence that it had delegated its service role, when there was such evidence before him, and the rules of natural required the Magistrate to consider that evidence. 8 The Magistrate admitted into evidence expert evidence proffered by both the plaintiff and the defendants. The plaintiff's expert Mr Yelds did not inspect the premises. 9 The Magistrate (at 29.55; 30) in his reasons stated: "The Court is asked to attach little weight or significance to the defendant's so called expert's report. He, after all, never inspected the site preferring to report on a briefing of the situation from someone else. The plaintiffs' report, on the other hand, is from a contractor who was on site, made a physical inspection and then provided a report." 10 The Magistrate then quoted from the MO and CA Bailey report, the so called Glossop report and the DC Electrical report. His Worship continued: "What the Court finds specifically is that the electrical box or so called fuse box was located upon common property. There was a statutory obligation on the owners corporation to keep it in a state of good and serviceable repair, the common property - that's s 62. There was no evidence that if the owners corporation did purport or, in fact, sought to delegate its management role, or indeed its statutory responsibilities for good and serviceable repair, that it had done so at the relevant time. More specifically, the terms of such delegation, particularly where a statutory obligation is concerned, to simply assign the management role would not necessarily be all embracing so far as statutory obligations are concerned.

Insofaras (sic) foreseeability is concerned, there is material, evidence, that previously this aspect of an inspection vested with statutory authorities until deregulation. If this responsibility vested with an entity, statutory or otherwise, then it is only reasonable to conclude that it passes, in this case, to the owners. If the rewiring of the premises was a decade ago, and that is not necessarily established, then there would not be a finding that an omission or fault by an electrical contractor in perhaps tightening a screw on the return circuit lead or wire was the cause. The event was discoverable, as the material establishes, and at the very least a service to determine the integrity of circuitry did or does exist, albeit at a fee. With what frequency that might be done is largely discretionary. The Court would find that the defendants had a statutory obligation to keep in a state of good and serviceable repair the common property. As a consequence of not so doing the plaintiffs sustained damage to their electrical items or appliances and THERE WILL BE A VERDICT IN FAVOUR OF BOTH PLAINTIFFS." 11 There was expert evidence to support Ms Irwin's and Mr Tebb's cases. The Magistrate acted judicially and gave each the opportunity of adequately presenting their case. He considered and analysed the expert evidence tendered by all parties. In those circumstances there has been no denial of natural justice. The appeals are dismissed. The summonses are dismissed. 12 Costs are discretionary. Normally costs follow the event. The plaintiff is to pay the defendants' costs as agreed or assessed in both matters.

(2) The summonses filed 20 June 2003 are dismissed.

(3) The decision of Magistrate Price dated 23 May 2003 is affirmed.

(4) The plaintiff is to pay the defendants' costs as agreed or assessed in both matters. **********

Last Modified: 12/17/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.